NYAPRS Note: In this State of the State address this past week, NYS Governor Andrew Cuomo proposed that, in order to maintain their tax-exempt status, hospitals demonstrate greater investments in addressing the social determinants of health in the communities where they operate. Right now, hospitals spend 4% of community benefit dollars on community improvement, which is the current federal requirement. The Governor believes that current federal requirements “do not do enough to help guide these vital investments toward community health improvement, and, as a result, hospital investment varies widely.” NYAPRS supports the Governor’s position here, recognizing the huge investments that hospitals have received from our DSRIP program.

Gov. Andrew Cuomo voiced his commitment to hospitals in his State of the State speech Wednesday, but in an accompanying policy paper, he asked hospitals to do more for their community in return for their tax-exempt status.Cuomo proposed that all voluntary hospitals identify spending in their community service plans that will go toward health improvement. In order to qualify for a tax exemption, hospitals often cite the charity care and losses they incur from treating Medicaid patients as a large part of the community benefit they provide.That emphasis results in less spending on such health programs as supportive housing, nutrition assistance and after-school programs, said Sara Rosenbaum, a professor of health law and policy at George Washington University.In New York, hospitals spend only about 4% of community benefit money on health improvement, according to the governor's office.The directive to describe community spending will be issued in future guidance from the state Department of Health, a department spokeswoman said."The federal requirements do not do enough to help guide these vital investments toward community health improvement, and, as a result, hospital investment varies widely," the governor's office wrote in itsState of the State policy paper.The Affordable Care Act added conditions for nonprofit hospitals to qualify for tax-exempt status, including requirements to conduct a community health needs assessment with an implementation strategy and to establish a written financial-assistance policy for patients. But the law did not direct hospitals on whether they must use the needs assessment to drive their community spending."New York is attempting to close the loophole that wasn't closed in the federal law itself," Rosenbaum said.More than 85% of this spending goes toward reimbursement for uncompensated patient care, not community investment, according to a2013 studyin the New England Journal of Medicine cited inHealth Affairs. Other expenses making up a hospital's community benefit total include money spent on research and graduate medical education.Bea Grause, president of the Healthcare Association of New York State, said that hospitals have been engaged with the department for years on how to align their efforts. Once organizations conduct their need assessments, they should be able to dictate how that money is invested, she said."Hospitals and their communities ought to be in charge of the final say." —J.L.